Inequality measurement and the rich: why inequality increased more than we thought

Cowell, Frank A. ORCID: 0000-0002-3778-2152 and Flachaire, Emmanuel (2023) Inequality measurement and the rich: why inequality increased more than we thought. Review of Income and Wealth. ISSN 0034-6586

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Abstract

To compare income and wealth distributions and to assess the effects of policy that affect those distributions require reliable inequality-measurement tools. However, commonly used inequality measures such as the Gini coefficient have an apparently counter-intuitive property: income growth among the rich may actually reduce measured inequality. We show that there are just two inequality measures that both avoid this anomalous behavior and satisfy the principle of transfers. We further show that the recent increases in US income inequality are understated by the conventional Gini coefficient and explain why a simple alternative inequality measure should be preferred in practice.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/14754991
Additional Information:	© 2023 The Authors
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Date Deposited:	30 Mar 2023 15:45
Last Modified:	18 Nov 2024 18:48
URI:	http://eprints.lse.ac.uk/id/eprint/118560

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